In a recent circular dated October 6, 2023, the Securities and Exchange Board of India (SEBI) has provided issuers who have listed Non-Convertible Securities with a limited relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This circular comes as a response to the evolving circumstances and extends the relaxation granted by SEBI regarding the dispatching of physical copies of financial statements.
Background
1. Regulation 58(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, stipulates that a listed entity is required to send a hard copy of the statement containing the salient features of all the documents, as specified in Section 136 of the Companies Act, 2013, and the rules made thereunder to those holders of non-convertible securities who have not registered electronically.
2. SEBI had previously relaxed the provisions of Regulation 58(1)(b) through Circular no. SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated May 12, 2020, following relaxations by the Ministry of Corporate Affairs (MCA) on May 5, 2020. Subsequently, SEBI granted further extensions based on MCA relaxations through the following circulars:
a) Circular no. SEBI/HO/CFD/CMD2/CIR/P/2021/11 dated January 15, 2021, extending the relaxation until December 31, 2021;
b) Circular no. SEBI/HO/DDHS/P/CIR/2022/0063 dated May 13, 2022, extending the relaxation up to December 31, 2022; and
c) Circular no. SEBI/HO/DDHS/RACPOD1/CIR/P/2023/001 dated January 05, 2023, dated September 30, 2023, extending the relaxation up to September 30, 2023.
3. The Ministry of Corporate Affairs (MCA) issued a circular on September 25, 2023, extending, among other things, the relaxation from dispatching physical copies of financial statements (including the Board’s report, Auditor’s report, or other documents required to be attached) until September 30, 2024.
SEBI’s Decision
In light of the MCA’s recent extension of relaxation until September 30, 2024, SEBI has decided to provide a corresponding relaxation for issuers of non-convertible securities. Therefore, the requirements of Regulation 58(1)(b) of the SEBI Listing Regulations are relaxed up to September 30, 2024.
This relaxation aims to ease the compliance burden on issuers and aligns with the extended timeline provided by the MCA for dispatching physical copies of financial statements.
Effective Date
The circular issued by SEBI will come into effect immediately upon its publication.
Instructions to Stock Exchanges
SEBI has instructed all stock exchanges to communicate the provisions of this circular to all entities with listed non-convertible securities. Additionally, stock exchanges are required to disseminate this information on their websites for wider awareness and compliance.
Conclusion
The SEBI circular dated October 6, 2023, extends the relaxation from compliance with certain provisions of the SEBI Listing Regulations concerning the dispatch of physical copies of financial statements for issuers of non-convertible securities. This extension, aligned with the Ministry of Corporate Affairs’ decision, provides issuers with more time to comply with these requirements, aiming to reduce administrative burdens during these times. Issuers and relevant stakeholders are advised to take note of this regulatory change and ensure compliance within the extended timeline until September 30, 2024.
*****
Securities and Exchange Board of India
To
Issuers who have listed Non-Convertible Securities
Recognised Stock Exchanges
Madam/ Sir,
Sub: Limited relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
1. Regulation 58(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) provides that a listed entity shall send a hard copy of the statement containing the salient features of all the documents, as specified in Section 136 of Companies Act, 2013 and rules made thereunder to those holders of non-convertible securities who have not so registered.
2. SEBI, vide Circular no. SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated May 12, 2020, relaxed the aforesaid provisions pursuant to relaxations by the Ministry of Corporate Affairs (MCA) vide Circular dated May 5, 2020. Thereafter, further extensions were granted by SEBI pursuant to MCA relaxations vide:
a) Circular no. SEBI/HO/CFD/CMD2/CIR/P/2021/11 dated January 15, 2021, till December 31, 2021;
b) Circular no. SEBI/HO/DDHS/P/CIR/2022/0063 dated May 13, 2022 up to December 31, 2022 and
c) Circular no. SEBI/HO/DDHS/RACPOD1/CIR/P/2023/001 dated January 05, 2023 up to September 30, 2023
3. MCA vide circular dated September 25, 2023, has, inter-alia, extended the relaxation from dispatching of physical copies of the financial statements (including Board’s report, Auditor’s report or other documents required to be attached therewith) up to September 30, 2024.
4. Consequently, it has been decided to relax, up to September 30, 2024, the requirements of regulation 58 (1)(b) of the SEBI Listing Regulations.
5. This Circular shall come into force with immediate effect.
6. Stock Exchanges are advised to bring the provisions of this circular to the notice of all entities with listed non-convertible securities and disseminate on their websites.
7. The Circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 101 of the SEBI Listing Regulations.
Yours faithfully,
Pradeep Ramakrishnan
General Manager
Department of Debt and Hybrid Securities
+91 – 022 2644 9246
pradeepr@sebi.gov.in
